Billionaire CEO: $1 trillion in commercial real estate defaults coming next 18 months to 2 years

The outlook for the sector is now so bleak that Cantor Fitzgerald’s billionaire Chairman and CEO Howard Lutnick is predicting between $700 billion to $1 trillion of defaults over the next two years unless interest rates fall quickly—and he sees that as unlikely.

“I think it’s going to be a very, very ugly market in owning real estate over the next 18 months, two years,” Lutnick told Fox Business last week, arguing there’s going to be a “generational change” in real estate.

To his point, there’s an estimated $1.2 trillion in commercial real estate debt maturing by the end of 2025, according to the Mortgage Bankers Association, and 25% of that debt is in the hands of struggling office and retail space operators. With interest rates rising more than 5 percentage points in the past two years, that’s a recipe for defaults.

Lutnick, who is also the chairman and CEO at the brokerage and fintech company BGC Partners, warned that the Fed’s interest rate hikes are like a ”steamroller” that is hitting the real estate market and the economy.

As Fortune previously reported, some real estate experts fear that rising commercial real estate defaults could trigger a doom loop that impacts regional banks with the most exposure to the sector, and eventually the entire economy.

In its Jan. 18 report, the IMF detailed its own doom loop fears, warning that financial supervisors “must continue to be vigilant” in order to ensure that the…